GBMB Update

0

On my last update I neglected to include my current holding of 2000 shares of ITMN, bought at 10.4 on 5/17/10 and now at 11.65.

I have a new holding of 2000 shares of OPTR bought at 7.95 on 8/10/10 and now at 8.20.

I ‘m really here to provide my current perception of a few more stocks in the GBMB fold as promised in my last post. I’ll start with the stocks I just mentioned:

ITMN – small cap stochastics took Intermune down to 8.5, a well I think they are unlikely to revisit. Most recently the share price has been on a steady upswing to levels not seen since the PDUFA collapse. I don’t see any short-term catalysts until the European approval decision on pirfenidone in H1 2011. The stock isn’t bouncing – the air went out of that ball months ago. So is the smart money beginning to seep back into the stock for the reasons I have outlined previously? Or is Intermune entering a cyclical phase that will take them back to the single digits? It’s a difficult question, but much more palatable now that I’m $2500 in the green rather than the red. I’ll try and hold on as long as the momentum seems to be upward, but I won’t see my position go below 11.4 again. And if I sell, I won’t be a buyer again above 10.

OPTR – this antibiotic developer has been a strange bird this year. I originally set a GBMB threshold of 11 for Optimer, and fortunately held back in the face of downward momentum. If I truly found a bottom at 7.95, it was more luck than skill. There have been no negative catalysts to shave away nearly half of the maximal share price over the last year. In the near future, Optimer will submit two strongly supported NDA’s for antibiotics for c.diff and traveler’s diarrhea. The pharma market always discounts antibiotics as a low margin product, but c.diff especially is a disease in search of a new drug. And there’s no question that Optimer with two approved antibiotics is worth a lot more than Optimer without. I can’t foresee any negative catalysts besides another dilutive financing, and even that seems unlikely at this point. Depending on the size of the bump we see from NDA submission/acceptance, this could be a hold through the first PDUFA date.

RGEN – I’ve missed some opportunites to make money on Repligen because the company is so … damn …boring. But the share price has shown decent volatility within a narrow range over the last three months. I made $2500 on a large bet with a narrow gain and I could have repeated the trade two more times if I had been paying attention. Maybe if I promise myself to spend any Repligen profits on hookers and crack I’ll start paying closer attention to these price movements. Revenues have been ticking upward and the company was profitable last quarter. No major catalysts are expected until February. GBMB buy below 3.2 – I mean it this time!

IDRA – Idera has been quietly progressing their pipeline and trading within a narrow range, without any particular reason for a 40% drop from the equilibrium price last winter. At a market cap of 79M with three compounds in early phase clinical trials, I continue to see them as undervalued. I’m maintaining my current investment at least until the share price goes back above 4.

ANDS – Anadys feinted at a breakout in July only to sink back down to yearly lows in the 1.7’s this month. It’s difficult to gauge where ANA598 stands against the other hepatitis C polymerase inhibitors in development, since all the studies seem to be structured a little differently. My take on the company at this moment in time is that ANA598 is certainly an effective antiviral, although its ultimate commercial viability is questionable mainly due to the rash. I don’t see this being the end of the story for the company, although the six-month price trend doesn’t look pretty. I’d like to see a little more stabilization after that downward slide but 1.7 is looking like a potential entry point. There’s still a few more months to go before we see the topline data from the phase II trial of ANA598 so I’m not in a rush to buy here.

MDVN – Medivation makes me nervous because I have little confidence in the ongoing trials of Dimebon and I’m not sure how much of the enterprise value of the stock is Dimebon-related. Topline results from the HORIZON trial of Dimebon in Huntington’s is expected in H1 2011, and GBMB does not want to be holding any shares when that data comes out. On the other hand, I do think Medivation may be undervalued for the prospects of phase III prostate cancer drug MDV3100. The AFFIRM trial will complete patient accrual this year but is unlikely to provide topline data before HORIZON. The share price bottomed just under 9 in June and is now about 15% above that level. I’m reluctant to try and thread the needle and eke out a profit before Horizon, but I might consider a short term trade with a price under 9. Otherwise, I think it might be better to await negative results of Horizon and try and catch the stock under 6 in advance of the ramp up to AFFIRM results.

I’m looking at other GBMB candidates – Delcath and Anthera come to mind. But unlike my CAPS database of 200+ companies, I feel like each additional GBMB player will detract from my ability to keep close track of the others. That’s probably what caused me to miss opportunities in Repligen and a double-down in Exelixis. So I’m going to take this opportunity to cut a couple of companies loose from GBMB – Genomic Health (GHDX) and Depomed (DEPO). I’m going to focus on Myriad in the molecular diagnostics space, and Depomed seems to have comfortably escaped their bottom ahead of the DM-1796 PDUFA in January 2011.

I sold my 2000 Intermune shares today at 11.58 for a GBMB profit of $2360. I think the stock is still undervalued on a long-term basis but for the short-term I'm not seeing any catalysts and I want to book profits before the next crisis. My new buy threshold is 10.

I also sold my remaining 1218 shares of Amicus today at 3.32 for a GBMB profit of $500. I wouldn't buy again above 2.5 before phase III data in 2011.